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Latest ONS construction stats published

The latest statistics on construction output have been released by the ONS showing a difficult three month series for the industry.

Following on from the monthly release, the three-month on three-month series has shown a decline in output for the sixth consecutive month. Construction output has been calculated as falling 3.4% in April, the biggest fall seen since August 2012.

With figures from the more volatile monthly statistics showing output rebound somewhat in April, the three-month series shows that the industry suffered quite badly over the winter period. Anecdotal evidence from the monthly series points towards the terrible weather in March slowing construction starts on site and this may well have affected the winter three-month on three-month, with the industry in general slow-down mode over winter. The April monthly figures showed an increase of 0.5% as the spring weather turned sunnier.

Construction output peaked in December 2017, with figures showing a highpoint of 30.3% above the lowest point in the last five years, April 2013. Even with the decline in output from the beginning of 2018, output still remains 23.4% above this low point, and confidence in the sector remains steady.

However, total new orders decreased over Quarter One with a fall of some 4.6% across the industry; infrastructure, one of the strongest performing sectors due to government investment, shows notable declines in new work, dropping some £379M. Future government ambitions will hopefully see this sector turn around sharply.

Other notable falls came in total housing repair and maintenance, and private housing new work. While the private housing sector enjoyed the most positive growth, increasing by £29M, this was offset by falls in public other new work, which contracted 14% and private commercial work, which decreased 7.6%.

Commenting on the construction output figures for April 2018, Brian Berry, Chief Executive of the FMB, said: “The UK construction sector declined by 3.4% in the three months from February to April compared with the previous three months. This is the biggest fall since the latter stages of the recession in August 2012. The Beast from the East has certainly played its part as it forced many construction sites to close in March. Indeed, builders were reporting that it was too cold to lay bricks.”

Berry continued: “Alongside the cold snap, the drop in construction output can also be attributed to rising costs for construction firms large and small. While wages are continuing to rise because of the acute skills crisis in our sector, firms are also feeling the pinch thanks to increased material prices. The depreciation of sterling following the EU referendum has meant bricks and insulation in particular have become more expensive. We expect material prices to continue to squeeze the construction industry with recent research by the Federation of Master Builders showing that 84% of builders believe that they will continue to rise in the next six months.”

Berry concluded: “In the medium to longer term, with nine months until Brexit-Day, the future is uncertain for the UK construction sector. The Government is still to confirm what the post-Brexit immigration system will look like. The construction sector is largely reliant on accessing EU workers with more than eight per cent of construction workers coming from the EU. It is therefore imperative that the sector knows how, and to what extent, it can recruit these workers post-Brexit.”

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